Half of all asset managers to be gone by 2030

18 June 2014   Category: News, Asia, Global, India, Mexico, Nigeria   By Daniel Shane

Half of all firms in the global asset management industry will have disappeared by 2030 as a result of shifting demographics and new technologies, according to a report by consultant KMPG.

The research, entitled Investing in the Future, warned that current business models in the asset management industry are not fit for purpose.

It claimed that asset managers were not doing enough to recognise and exploit new technologies such as big data and data analytics, which were providing opportunities for players outside of the traditional fund manager sphere. KPMG said that it expected pressure on margins to lead to a wave of M&A in the area, which could see large retailers and technology companies “becoming the next big powerhouses in investment management”.

“We are on the verge of the biggest shake-up the industry has experienced; and the message to asset managers is clear – adapt to change or your business won’t survive,” Tom Brown, global head of investment management at KPMG International, commented. “The two biggest issues that need to be addressed are the changing client base and technology, and asset managers need to get to work on these areas now.”

KPMG said that the way investors were buying fund management products was also changing rapidly, with an increasing focus on online and social media, rather than face-to-face advisers.

It also forecast that capital inflows into the asset management industry would shift from the developed world to emerging economies such as China, Mexico, India and Nigeria over the coming 15 years.

Speaking to Asia Asset Management, Joe Mansueto, founder and CEO of fund research and analysis giant Morningstar, agreed that the rise of passive investing and alternative indexing models such as smart beta were pressurising active asset managers. However, he did not forecast significant consolidation for the industry over the coming years as a result.

“With passive investing and smart beta, a star manager is less front-and-centre – but I don’t think it’s the death of them. You still get some star fund managers who really perform well, and they’ll be back, although lately I think there has been a dearth of them,” Mr. Mansueto said.